LyondellBasell(LYB) - 2025 Q4 - Earnings Call Transcript

Financial Data and Key Metrics Changes - In 2025, LyondellBasell generated $2.3 billion of cash from operations, reflecting strong working capital discipline and focused cost management [14][19] - Full-year earnings were $1.70 per diluted share, and EBITDA totaled $2.5 billion [14] - The company achieved a cash conversion ratio of 95%, well above the long-term target of 80% [20] Business Line Data and Key Metrics Changes - The Olefins and Polyolefins Americas segment reported fourth quarter EBITDA of $164 million, down from the prior quarter due to higher feedstock costs and lower polyethylene margins [24] - The Olefins and Polyolefins Europe, Asia, and International segment experienced a fourth quarter EBITDA loss of $61 million, impacted by lower demand and increased competition from low-cost imports [26] - The Intermediates and Derivatives segment achieved fourth quarter EBITDA of $205 million, supported by improved propylene glycol demand [29] - The Advanced Polymer Solutions segment delivered fourth quarter EBITDA of $38 million, reflecting a 55% year-over-year increase due to operational improvements [32] Market Data and Key Metrics Changes - Industry margins in 2025 were approximately 45% below historical averages, with North American polyolefins margins at their lowest levels in over a decade [12] - The company noted that global trade disruptions and low demand for durable goods were significant factors pressuring margins [12] - In Europe, polyolefin markets faced soft demand driven by increased competition and ongoing destocking [26] Company Strategy and Development Direction - LyondellBasell is executing a three-pillar strategy focused on growing and upgrading the core, building a profitable circular and low-carbon solutions business, and stepping up performance and culture [9][10] - The company is advancing its portfolio transformation with the divestment of four European assets, expected to complete in Q2 2026 [9][28] - The Value Enhancement Program exceeded its original target, achieving $1.1 billion of recurring annual EBITDA in 2025, with a goal of $1.5 billion by 2028 [10] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the challenging market conditions in 2025 but expressed confidence in the company's ability to generate positive free cash flow and capture significant upside once margins normalize [12][13] - The company plans to maintain strong capital discipline and focus on safe and reliable operations while pursuing selective investments in high-value growth [15][19] - Management expects modest improvements in market conditions as they move through 2026, with a focus on execution and cost discipline [35][36] Other Important Information - The company reduced its global workforce by 7%, or approximately 1,350 employees, to the lowest levels since 2018 [16] - LyondellBasell ended 2025 with $3.4 billion of cash and short-term investments, and $8.1 billion of available liquidity [19] Q&A Session Summary Question: Regarding dividend strategy and growth investments - Management highlighted the importance of maintaining an investment-grade balance sheet while balancing cash returns to shareholders and growth investments, with ongoing discussions on capital allocation strategy [39][43] Question: Clarification on CapEx guidance for 2026 - Management confirmed a CapEx guidance of approximately $1.2 billion for 2026, with $800 million allocated for maintenance and $400 million for growth projects, reflecting a light year in terms of turnarounds [46][49] Question: Outlook on the oxyfuels market for 2026 - Management expects the oxyfuels market to normalize following a volatile 2025, with typical seasonal improvements anticipated [62] Question: Assessment of the polypropylene market - Management indicated that polypropylene is currently weaker than polyethylene due to higher exposure to durable goods, with expectations for recovery dependent on consumer confidence [66][70] Question: Update on the US Gulf Coast polyethylene market - Management noted low industry inventories and anticipated price increases supported by robust demand, with expectations for improved integrated margins [78][80] Question: Insights on China's anti-involution policies - Management mentioned ongoing discussions regarding China's policies, with expectations for potential announcements in the near future [81]